It's pretty much what champair79 said. Children under 2 are classified as infants and are regarded differently to everyone over 2. They must be seated on an adult's lap for takeoff and landing, are not entitled to their own seat, don't generally get things like a meal allocated for them, etc. A passenger count total is of the number of seats occupied as opposed to number of persons on board - giving a count of 100+3, for example, makes it clear there are 3 lap children rather than just saying there are 103 persons on board.